Will Trump’s Aggressive Budget Cuts Prove a Gold Steroid?

Trump Budget Cuts Whatever your thoughts about the Commander-in-Chief’s preliminary 2018 budget proposal, you’ve got to allow him this much. He’s held to his draconian campaign promises to eliminate what he’s perceived to be fluff and waste.
 
To finance a surprisingly mild increase in defense spending, initial payment on a border wall, and school voucher programs, he’s proposing to gut the Environmental Protection Agency, the State Department, and the Department of Agriculture.
 
The President is also suggesting, among others, cuts in the Department of Commerce: trimming $250 million from coastal research programs that prepare communities for seas that are rising and more severe storms. He intends to eliminate a $73 million Sea Grant program, as well as the entire Economic Development Administration, which provides grants to struggling communities.
 
Trump is cutting the Education Department by 14%- including grants for teacher training, after school programs, and support for low-income and minority college students. But these cuts will accompany a $1.4 billion investment in charter schools, and private schools.
 
Needless to say, the beat goes on. If Congress approves the President’s budget, the Department of Health and Human Services (HHS) will be forced to endure an 18% cut, and the Department of Housing and Urban Development (HUD) a 13% cut.
 
Certified Investment Adviser and precious metals analyst Arkadiusz Sieroń writes that Trump’s budget could be derailed or delayed because many Republicans will object to some of its key points. He also points out that, because of the budget’s “bumpy road” ahead, gold will find support as a reaction against an uncertain economy.
 
After all, there’s nothing in the President’s budget proposal about the development in infrastructure he promised his voter base. He has postponed publicizing the details of this mammoth initiative until May. In the meantime, according to Sieroń, investors and voters could lose faith in this initiative. If Republicans chip away at the President’s proposed budget, investors could easily become disappointed. Financial disappointment of any sort makes gold a desirable counterbalance for investors looking to protect their portfolio.
 
Meanwhile, for all the President’s campaign promises about getting Mexico to pay for a border wall, his budget proposal reveals that the cost for keeping illegal Mexicans and drugs from crossing the border will cost U.S. taxpayers mightily.
 
Included in Trump’s budget proposal is a $2.6 billion investment on “tactical infrastructure,” and $314 million for the hiring and training of 500 border-patrol agents and 1,000 Immigration and Customs officers in 2018.
 
Trump’s plan also specifies an additional $1.5 billion for detaining and deporting unauthorized immigrants, and $15 million for a national E-verify system designed to reduce unauthorized employment.
 
Yet the President’s budget proposal reveals his staff might have been unaware of or disregarded February’s Homeland Security report indicating an estimated cost $21.6 billion for the wall’s construction and maintenance.
 
In short, President Trump’s radical budget changes prompts the kind of uncertainty that could drive gold to much higher prices in the months to come. You’d be wise to accumulate as much of the yellow metal as possible at its current price.
 
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